Today, I went to the dentist. When I went to pay I was informed that my insurance had changed in between visits and that my deductible was now larger. What the heck? I had been under the impression my new plan was somehow better than my old plan. After reflecting on this for a moment I realized why I had switched: the ceiling for how much I could pay in the event of something catastrophic going awry is lower with the new plan.

This is institutionalized gambling, I realized. And the stakes are as high as they can be.

Should I bet that nothing out of the ordinary will happen to me over the course of the next year? Or should I bet that it might? If I am wrong in the first case I’m bankrupt but if in the second case I am wrong I am just poorer than I would otherwise be.

On my bike ride home a question I had been trying to untangle for a while was clarified. I’ve been wondering since I got to San Francisco how it’s possible for healthcare to cost as much as it does in the States. I know there are a multiplicity of reasons but I’ve always been puzzled as to why the insurance companies don’t try to force down the cost of services and drugs to reduce their own pay outs. I know that insurance companies are fragmented in a way that nation-wide healthcare isn’t, thus making it more difficult for them to lobby as a group for lower costs, but I don’t think that’s the answer.

I pay for insurance because the cost of going without it is life-ruining. Insurance companies have every incentive to keep the cost of healthcare as high as possible because they can charge as much as they want, so long as it less than the cost of going completely bankrupt. They’ll lose some people who just can’t pay their rates but they’ll still make a killing on the people who weigh their odds and try to make the safest bet possible.

Which is just nuts. It’s a bit like placing a bet with a cop that nothing will happen to you in the next year and then passively watching as he lets random people get beat up by gangsters. If people were to stop getting beat up your bet would change and he knows it.

(So - what do you think? Am I off? This is one of those cases where I know there are multiple view points and missing data. I’m curious and want to know more. Let’s chat)